Was funktioniert, nicht neu erfinden

0:00Hey, how's it going? Mr. 84-million top line, let's talk. >> Well, you know, I wish I owned the company. I'm just the CEO here just to clarify. But, uh I want to ask you, you know, in in that kind of position uh one of the big things is product, right? One of the big parts of product is like before you even get to the offer, right? It's like when you're building the product um

0:32>> Can you tell me what the what business you're in real quick? >> Yeah, so we're like if you think of TradingView just plug in a different name. >> I don't know what TradingView is. Is it like a stock trading platform? >> Uh no, it's just like a charting platform. So, you just >> Okay, like candlesticks, etc. Okay. >> Yeah, and so you know what we really offer is like tools, right? And then education on how to use the tools, but obviously never advice.

1:02>> Okay. >> Just got to, you know, put that out there. The big thing though is you know, we're we've already tapped into like using customer on like what do they want? What's next? >> Uh-huh. >> And so now it's going beyond like what are they asking for and trying to figure out the step like the step beyond that, a little more of like a visionary of like before they even know they want it, you come up with it, right? And we've had a couple of those. You get some grand slam offers.

1:38>> Yeah. >> They go really well, but you know uh but >> Yeah. >> I Are you owned by private equity or by founder? >> Uh by founder. >> Okay, got it. Okay, heard. >> So, it's you know, the big thing is uh like what's a model, a and method for finding that lightning in a bottle. >> So interesting cuz I have like such a different angle on this.

2:04>> Yeah, go with yours. >> Yeah. >> Yeah, so like I think I think thinking like, "Okay, how do I, you know, revolutionize the space?" It's so like you've gone to, you know, How old is the business? >> Oh, jeez, like 2009. Whatever that is. >> So it's established and you have you been growing every year? >> Uh yeah, like 50% for a couple and then, you know, >> Yeah. >> we'll see. >> Still good.

2:29>> So I I'll give you my my honest opinion. Um my honest opinion is like I wouldn't break something that's working really well and growing 50% a year. Because like all of the all of the extra effort of like We're going I almost fell over my chair. Um I was yeah. Um all of the extra effort of like, "Where is this lightning in a bottle?" Um I have found the lightning in a bottle comes from looking at my existing thing that people already want and like and turning it into something that they already want and love. And so let me let me break that down from a tactical perspective. So I think of creating excellent products as looking at the end state, looking at the end goal, and then saying, "How do I remove everything that sucks about getting this outcome?"

3:14>> Mhm. >> And so I think about excellent products as removing 100% of friction rather than how do I make something that's new and exciting. Because marketing is about new and exciting. Product is about the thing everybody already wants but not but but removing everything that sucks about getting it. >> Yeah, yeah, 100%. And I think one of the one of the big things is you have to tell everyone it's hard, right? Like you have some sort of regulation in place, but like with the product uh you know, our biggest hits happen when you figure out how to put the magic potion together and it takes all the friction out of it.

3:52>> Okay. >> And and you can like you said then the marketing does a great job of finding all the reasons why they should buy. But trying to trying to find like what's that next product that could be that same potion but in a different area, right? And there's so many factors in our industry like I'm not just limited by oh well we did it. It's

4:20>> Yeah. >> you know uh It's I I have a different question on the strategy. >> Yeah, I have a question for you. So do you think that if if we could take your current product in of itself it works it looks like it's working well and it could you I'm assuming based on that it's a technology platform could you add more users to it and marginal cost for that is zero. It's it's a tech margins, right? >> It's definitely not tech margins. I wish. Um but it's you know the cost to acquire a customer

4:54>> Mhm. >> is pretty uh you know one of the first things I did when I came in is we moved cost to break even from 90 to 10 days. That's great. Uh >> Okay, that's great. >> And you know then we have to make a decision of like how do you grow 50% is you just choose not to make money, right? And you're like okay well you can afford to spend more >> Yeah. Well do they stick? Do the customers stick?

5:21>> Yeah. Yeah. About a year. >> well then I mean if that's if that's the case then I mean kind of that is the game. I mean you're just trading like So I mean I So I'll tell you something that a long time ago mentor explained to me and it like this may seem obvious to you given you that you're in the space that you're in but I'm also saying this for everybody else who's listening. So let's say simple math, right? You know $100 million a year and you've got $10 million in profit, all right? That $10 million in profit if we take it as income, right? We're going to we're going to keep, you know, $6 million of that, right? And then great, now we put it into the S&P, we put it into real estate, we put it in whatever, right?

5:55Alternatively, if I take that $10 million and then I put it back into advertising, and that $10 million turns into, let's say, first first year it turns into $30 million revenue. Does that sound realistic for your business? >> Yeah, I mean, it's essentially what we >> Okay. No, no, no. Yeah, let me get let me finish. Yeah.

6:18So, 10 million goes in, 30 million becomes revenue, and we're valued on EBITDA, right? Or you value on top line? >> Uh we're probably closer to top line. There's some multiplier to >> That's fine. Okay. So, so if we're Yeah, so if we're measured on top line, then we just created $60 million of enterprise value from the 10, tax-free. And so to me, it's like I'm I'm choosing option A, I can take $6 million net of tax and then put it in the S&P and let it grow for by 10% a year, or I can take the 10 and then turn it into 60, tax-free in that same period. Now, obviously there's an the only real question there is risk tolerance. This is like how much am I willing to, you know, bet more on this existing business. But from a dollar, you know, a dollars and cents perspective, I mean, it's a 10x difference.

7:07>> Yeah. >> So, that's that's how I think through these things in terms of your question of like, if I'm the founder, and I know you're not the founder, but like if I if I were the founder and I'm making this decision, it's going to be 100% the question the question is down to the founder's appetite for risk. >> Yeah. >> Fundamentally. But yes, if I were in your position and I did say like I want to go take the hill, I'd be like, well, let's just take the 10 and then put it in and go from, you know, 84 which I think you're at to, you know, 110 or 120, and that would be the that would be my approach.

7:34>> Yeah. I'll give you one one one product hack that you that you shared. So, anytime you're thinking about, hey, I need a new lightning in a bottle, I'll give you a very simple hack to think about the world, right? Take your business and essentially think about it as an analog like a think about it like a course. As in as a done kind of do-it-yourself where hey, I get in here, I do these 10 modules, I do this 10 effort, and I then at the end I get this Y result. If you map that 10 modules out, then you have a product or a system you can say which of these 10 modules does this product or system solve? So now your your product development is actually tied to your marketing, too. So you can go to the marketplace and say if you are a trader, you would and want an analytics platform, you'd come in on day one and you'd have to do these 10 things over 3 months to get this X result. You'd have to do all the work. Instead of doing these 10 things, you only have to do the these three because these seven things the product already does. So anytime you want to hack product development, you want to think about it as how do I give people a clean path and then take away things from that path that the product does, and that allows you to probably iterate on that faster.

8:37>> Yeah, and following and I'm sure you do screen recordings and like, you know, vigorously like watch people actually use the product, but like that is where all the big innovations in my life have come from from a technical perspective, which is just like watching people stumble, like literally watching people over the over their shoulder and like watch them get stuck. And the thing is just it's sometimes the hilarious things that are tiny that create the friction that end up like ruining whether something's successful or not. >> Absolutely. I couldn't agree more. I really appreciate the help today.

9:04>> No, I appreciate you, man. Congratulations. >> Yeah, great job, dude. >> Thanks. >> All right. >> All right, rock and roll. If you're a business owner and you are not growing as fast as you'd like, I'd like to give you a free gift. So my team and I put together the $100 million scaling road map, which is basically 200 hours of us looking over all the portfolio companies we've had and what stages of growth they went through and more importantly, where they got stuck and how they got past it. And so we broke it in these 10 stages and we made this little kind of quiz thing where if you put in your business information, it'll tell you where you're at and the most important part for you, what to do for each of the of the business across product, marketing, sales, customer success, recruiting, IT, human resources, and finance. And so, no matter what you're struggling with, someone else has already struggled with it and solved it. And so, I'd like to give you this thing absolutely free. You can go to acquisition.com/roadmap, plug in your business information, and if you want us to actually help you deconstruct the business and you're trying to scale, we'd love to help you out. On the thank you page, you can book a call with my team and we will look at the business, see if we can help, and if we can, we'll invite you out to Vegas, we'll do this in person live.